711.632/22
The Secretary of State to the Minister in Austria (Washburn)
Sir: The following instructions in regard to the provisions of the Treaty of Friendship, Commerce and Consular Rights, which you are engaged in negotiating with Austria, are in continuation of the Department’s instruction No. 459 of May 12, 1926.
Article VII. With reference to the request of Austria that special advantages with respect to customs duties which Austria might grant to Hungary or Czechoslovakia pursuant to Article 222 of the Treaty of St. Germain should be exempted from the most favored nation assurances given in Article VII in the same way that the special treatment accorded by the United States to Cuba is exempted, the Department notes that the duration of arrangements contemplated by Article 222 was limited by the terms of the Article to five years from the coming into force of the Treaty of St. Germain. The Department understands that this period expired on July 16, 1925, five years after the date of the deposit of the first proces-verbal of ratification on July 16, 1920. It would appear therefore that such special advantages with respect to customs duties as Austria may have extended or may extend to Hungary or Czechoslovakia after July 16, 1925, are not within the scope of Article 222. You are instructed to bring the Department’s understanding of this situation to the attention of the Austrian Foreign Office for the purpose of ascertaining whether Austria desires to abandon the request for such exemptions. The Department does not desire that you suggest that an exception in respect of advantages in regard to customs duties granted by Austria to Czechoslovakia or Hungary beyond the period contemplated by Article 222 of the Treaty of St. Germain would be acceptable [Page 938] to the United States. If, however, it should develop in the course of the negotiations that Austria desires such an exception to be made, you are authorized to agree to it by adding at the end of the last paragraph of Article VII a provision somewhat as follows:
“or to any special advantages with respect to customs duties which may be granted by Austria to certain natural or manufactured products of Czechoslovakia and/or Hungary in agreements in which such products are specified, so long as such special advantages are not accorded to the products of any other country.”
Your attention is invited to paragraph five of Article VII of the Treaty with Germany which is as follows:
“All the articles which are or may be legally imported from foreign countries into ports of the United States, in United States vessels, may likewise be imported into those ports in German vessels, without being liable to any other or higher duties or charges whatsoever than if such articles were imported in United States vessels; and, reciprocally, all articles which are or may be legally imported from foreign countries into the ports of Germany, in German vessels, may likewise be imported into these ports in United States vessels without being liable to any other or higher duties or charges whatsoever than it such were imported from foreign countries in German vessels.”
No corresponding paragraph was included in the draft treaty submitted by the United States to non-maritime States such as Hungary and Austria. Such a paragraph was, however, agreed upon in the negotiations with Hungary and is included in the Treaty signed with Hungary as paragraph 6 of Article VII. (Treaty Series No. 748)
The same provision enlarged so as to relate to exportations as well as importations is included as paragraph 5 of Article VII in the treaties signed by the United States with Esthonia and Salvador as follows:
“All articles which are or may be legally imported from foreign countries into ports of the United States or are or may be legally exported therefrom in vessels of the United States may likewise be imported into those ports or exported therefrom in Esthonian (Salvadorean) vessels, without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in vessels of the United States; and, reciprocally, all articles which are or may be legally imported from foreign countries into the ports of Esthonia (Salvador) or are or may be legally exported therefrom in Esthonian (Salvadorean) vessels may likewise be imported into these ports or exported therefrom in vessels of the United States without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in Esthonian (Salvadorean) vessels.” (Congressional Record, March 26, 1926, pages 6094, 6095).
While this Government does not ask the Austrian Government to agree to insert the foregoing paragraph in the Treaty, it will be entirely agreeable to this Government to have it inserted in the form in which it is included in the treaties with Esthonia and Salvador, if the Austrian Government so desires. The provision in the Treaty with Germany is terminable at the expiration of one year from the date of coming into force of the Treaty on conditions stated in the Resolution by which the Senate gave its advice and consent to the ratification of that Treaty, which were accepted by Germany. The method of incorporating these conditions in the text of the Treaty is illustrated by Article XXIX of the Treaty with Esthonia. (Treaty Series No. 736.) The exact language which the Department will suggest for use in Article XXV of the Treaty with Austria in the event that the paragraph under consideration is included in Article VII will be furnished below when Article XXV is considered in these instructions.
The Department has under consideration whether it may be necessary or advisable to raise in the negotiations with Austria questions relating to the treatment of American Commerce in relation to quotas, contingents or licenses for the importation or exportation of articles the importation or exportation of which is restricted or prohibited, shipments in indirect trade, and certain questions of customs procedure.
The consideration which the Department is giving to these questions may lead to proposals of additional paragraphs to Article VII, or of amendments to certain of the paragraphs in the Article as originally drafted or to a proposal for the signing of a Protocol or Exchange of notes dealing with these matters at the same time that the Treaty is signed. The Department hopes to be able to instruct you definitely in regard to this matter at an early date. Pending the receipt of further instructions in regard to Article VII you may, in your discretion, either renew the negotiations in regard to that Article in respect of the two paragraphs which are hereinabove considered, reserving a right to make suggestions in regard to the above-mentioned matters after the receipt of further instructions, or, entirely suspend negotiations in regard to Article VII, in either event explaining to the Austrian negotiators in so far as you may deem it to be advisable the reason for your action.
Article VIII. This Government desires that the words “internal taxes,” be inserted in the seventh line of Article VIII, after the word “to.” This amendment also was made during the negotiations with Germany. The Article will then read:
“The nationals and merchandise of each High Contracting Party within the territories of the other shall receive the same treatment as nationals and merchandise of the country with regard to internal taxes, transit duties, charges in respect to warehousing and other facilities and the amount of drawbacks and bounties.”
The Article as herein amended is included in the treaties signed with Hungary, Salvador and Esthonia as well as in the Treaty with Germany.
Articles VIII and XIII. The Austrian experts seem to be under the impression that Article VIII is inconsistent with Article XIII in that the former provides for national treatment with respect to transit duties and the latter provides that persons and goods in transit shall not be subjected to any transit duties. This apparent inconsistency will doubtless disappear when it is explained to the Austrian experts that Article VIII relates to goods imported into the United States or Austria and Article XIII relates to goods or persons moving through the territory of either High Contracting Party to territory beyond.
This Government accepts the interpretation by the Austrian Government of the words “transit duty” as not comprising charges for visa certificates for persons in transit. The reference to transit duties upon merchandise which is the subject of monopolies, as tobacco, salt and explosives is not clear to the Department. If the Austrian Government would understand that the provisions of Articles VIII and XIII apply to articles the subject of monopoly in a different manner or to a less degree than to other articles of merchandise, this Government would desire to receive and consider the views of the Austrian Government in regard to the matter.
Article X. (Article XIII of the Treaty with Germany). At the request of the German negotiators the following sentence was added at the end of the first paragraph of this Article: “The foregoing stipulations do not apply to the organization of and participation in political associations”. The sentence is also included in the treaties signed with Hungary (Article X) and Esthonia (Article XIII). It is not included in the treaty signed with Salvador. This Government does not propose it for inclusion in the Treaty with Austria. It desires, however, that you should bring the sentence and the fact that it is included in the treaties signed by the United States with Germany, Hungary and Esthonia to the attention of the Austrian negotiators and state to them that if Austria desires to have the sentence inserted at the end of the first paragraph of Article X of the Treaty under negotiation, this Government will be glad to agree to it.
Article XI. Apparently Austrian law forbids commercial travelers to take orders for merchandise from the consumer but allows them to sell their merchandise only to merchants, industrials and tradesmen. In view of the provisions of Austrian law on the subject, the Austrian negotiators suggested the omission of paragraph (c) of Article XI, which provides that a commercial traveler may sell his samples without obtaining a special license as an importer. They suggested also that paragraph (g) of Article XI, which provides [Page 941] that peddlers and other salesmen who vend directly to the consumer, shall not be considered as commercial travelers, but shall be subject to the license fees levied on business of the kind in which they are engaged, should be modified so as to provide merely that salesmen who vend directly to the consumer shall not be considered commercial travelers. You reported that under the Austrian Constitution the provincial governments may regulate and prohibit peddlers, and that as a matter of policy foreigners are not given concessions to peddle. For these reasons the Austrian negotiators desire to have the reference to peddlers omitted from paragraph (g) of the Article. They desire to avoid according by treaty favored nation treatment with respect to peddling, or to enter into any treaty obligation touching peddlers.
It is not believed that the explanations offered justify the omission of the provisions which the Austrian experts desire to have omitted. Paragraph (c) does not give commercial travelers the right to sell their samples to persons other than merchants, industrials or tradesmen. If commercial travelers representing American concerns are permitted to sell their samples to merchants, industrials or tradesmen, the privilege granted by paragraph (c) would be fulfilled. The Austrian law referred to in your despatch does not, therefore, justify the omission of paragraph (c).
You stated that it is not the policy of the provincial governments to permit foreigners to peddle, and that, therefore, Austrians cannot grant favored nation privileges with respect to peddling. If the nationals of other countries are not granted permission to peddle, a favored nation clause of a treaty between the United States and Austria could not be made the basis of a demand for that privilege on behalf of American citizens. There is not perceived in the explanation conveyed in your despatch a reason for making the modification in paragraph (g) proposed by the Austrian negotiators. However, as it is not believed that the business of peddling is of much consequence to American citizens, the Department is not indisposed to meet the viewpoint of the Austrian negotiators with respect to peddlers in the event that they adhere to that viewpoint after you have discussed the Department’s views as set forth above with them.
It is suggested that if the view of the Austrians be adopted, with respect to peddlers, paragraph (g) be omitted and paragraph (c) be made to read as follows:
“A commercial traveler may sell his samples without obtaining a special license as an importer. Salesmen who vend directly to the consumer shall not be considered commercial travelers.”
Such a provision would secure to American commercial travelers the right to dispose of their samples to a class of purchasers to whom [Page 942] they are permitted to sell under Austrian law and would not in any way contemplate traffic forbidden by Austrian law. At the same time peddlers would be excluded from the scope of the Treaty and the policy which the provinces of Austria are said to follow with respect to peddling could be maintained.
If this suggestion for the consolidation of paragraph (c) and paragraph (g) be adopted, paragraph (h) and paragraph (i) will of course be re-numbered paragraph (g) and paragraph (h) respectively.
Article XII. You stated that the Austrian experts have no objection to paragraph (b) of Article XII, provided it is understood that upon departure from the country the cancellation of the bond is to be effected in an Austrian port. The Austrian experts propose also with respect to Article XII, that paragraph (c) of that Article be amended by striking out everything after the semicolon in line 5, so that the paragraph will read as follows:
“It is understood that the traveler will not engage in the sale of other articles than those embraced by his line of business.”
The Department does not understand that a requirement by Austria that the cancellation of the bond for the payment of customs duties on samples not re-exported should be effected at an Austrian port of departure would be in any way inconsistent with the provision in regard to the cancellation of such bonds contained in paragraph (b) of Article XII. You are authorized to accept the amendment proposed by Austria to paragraph (c) of Article XII.
This Government desires to have the words “or other competent authorities” inserted in the third line of the second paragraph of subdivision (b) of Article XII, after the word “officials”. This also is an amendment arising out of the negotiations with Germany. As a consequence of the insertion of these words the word “customs” in the ninth line of this paragraph will be stricken out so that the second sentence of the paragraph will begin with the words “The said officials”. The paragraph as amended will read:
(b) It is the citizenship of the firm that the commercial traveler represents, and not his own, that governs the issuance to him of a certificate of identification.
The High Contracting Parties agree to empower the local customs officials or other competent authorities to issue the said licenses upon surrender of the certificate of identification and authenticated list of samples, acting as deputies of the central office constituted for the issuance and regulation of licenses. The said officials shall immediately transmit the appropriate documentation to the central office, to which the licensee shall thereafter give due notice of his intention to ask for the renewal or transfer of his license, if these acts be allowable, or cancellation of his bond, upon his departure from the country. Due [Page 943] notice in this connection will be regarded as the time required for the exchange of correspondence in the normal mail schedules, plus five business days for purposes of official verification and registration.
The paragraph as herein amended is included in the Treaty signed with Hungary (Article XII) as well as in the Treaty with Germany (Article XV). In the Treaty with Esthonia a most favored nation clause relating to commercial travelers (Article XIV) was agreed upon in lieu of articles corresponding to Articles XI and XII of the draft submitted to Austria. The United States and Salvador are parties to a special convention relating to traveling salesmen, signed in 1919 (3 Treaties, Conventions, etc., 2826, Treaty Series No. 651, 41 Stat. 1725), and consequently no articles are included in regard to them in the Treaty of Friendship, Commerce and Consular Rights signed February 22, 1926.
No question has been raised in regard to Article XIII other than that considered above in connection with Article VIII and none has arisen in relation to Article XIV. The Department’s views in regard to the questions that have been raised by Austria in regard to Articles XV and following, as well as in regard to such further questions as it may decide to ask to have considered in relation to Article VII and its views concerning the results of your negotiations on Articles I to VI inclusive, as reported in despatch No. 1106 of July 20, 1926, will be transmitted to you promptly in other instructions.
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